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Tuesday, January 27, 2009
Is it really some revolutionary idea that good credit helps us buy stuff? Of course not, but we need to understand the system to maximize our chances.
It is true that your credit scores, ranging from 400 to 850 are the main determinant when buying a home with a mortgage. The credit scores give lenders an easy snapshot of your credit picture.
People tend to oversimplify things. When it comes to their own credit scores they assume that as long as payments have been on time the scores should be good.
This is only partially true. Your credit score is generated from numerous factors in combination. Thereafter, no one knows except the developer and those in the real know.
Since we started with payment history you should be aware that you're not late until thirty days post the due date. Keep that in mind when in a pinch. You pay all the way up til the end and still have a clean payment history.
Keep low balances relative to your available credit. If you keep a five dollar balance and you have $1,000 limit is better than a $5 balance and a $10 credit limit.
You definitely don't want to be maxing your cards out. That is bad juju, even if you pay them on time.
A lack of credit history typically works against credit scores. Do yourself a favor and get 2 or 3 slats of plastic. Start using them immediately and pay on time of course.
Do this in moderation. You don't want to go out and open a whole plethora of trade lines. This may be seen as a move to use a bunch of debt.
You want to use your new credit cards every single month and every month you want to pay off the balance. You'll be shocked at how much your scores rise in a very short time.
As far as credit bumps, bruises and scrapes, the more time they exist in your past the better your scores. If even considering looking for a home be extremely careful. Just one recent 30 day late can kill scores.
The scoring system is logical. Be logical when sculpting your credit and watch your scores rise.
It is true that your credit scores, ranging from 400 to 850 are the main determinant when buying a home with a mortgage. The credit scores give lenders an easy snapshot of your credit picture.
People tend to oversimplify things. When it comes to their own credit scores they assume that as long as payments have been on time the scores should be good.
This is only partially true. Your credit score is generated from numerous factors in combination. Thereafter, no one knows except the developer and those in the real know.
Since we started with payment history you should be aware that you're not late until thirty days post the due date. Keep that in mind when in a pinch. You pay all the way up til the end and still have a clean payment history.
Keep low balances relative to your available credit. If you keep a five dollar balance and you have $1,000 limit is better than a $5 balance and a $10 credit limit.
You definitely don't want to be maxing your cards out. That is bad juju, even if you pay them on time.
A lack of credit history typically works against credit scores. Do yourself a favor and get 2 or 3 slats of plastic. Start using them immediately and pay on time of course.
Do this in moderation. You don't want to go out and open a whole plethora of trade lines. This may be seen as a move to use a bunch of debt.
You want to use your new credit cards every single month and every month you want to pay off the balance. You'll be shocked at how much your scores rise in a very short time.
As far as credit bumps, bruises and scrapes, the more time they exist in your past the better your scores. If even considering looking for a home be extremely careful. Just one recent 30 day late can kill scores.
The scoring system is logical. Be logical when sculpting your credit and watch your scores rise.
About the Author:
Near or far from Austin this is a great site for a home mortgage refinance calculator. Make sure you go there.
posted by Credit Counseling at
5:44 PM
0 Comments
Debt is something that can be explained by one's personal financial management. Some people with certain spending habits are much more to be lead to debt. We can recognize the habits of these folks with their frequent use of their credit cards but have recurrent missed payments.
These folks need the help to untangle themselves from the destined future financial collapse. But some of them might be in denial of their financial situation as this can be very humiliating.
Distinguishing the existence of this situation, even on the personal level, is extremely important for one to wake up and restrain their spending habits before it is too late.
One of the fastest ways to get further into debt is to use your credit cards even if you have the cash to purchase something. This type of mindset where you buy something with nothing is a typical human tendency to seek for convenience. The down side however is that if one doesn't want to pay today with the purchase, he will not likely pay for it in the future. That is where the methods of restraining oneself in the aspect of personal finance are so important.
Always use cash whenever you make the everyday purchases like groceries and keep your credit cards away from the scene. If one can't resist the appeal of credit cards, it is very advisable that these must be avoided completely. If one is in a large balance that even the minimum payment is difficult to pay, it is suggested not to use the card anymore. Cut up the cards and use debit cards instead while you are still paying for the balances.
Why use cash? Because with credit cards, you are less likely to pay your credit card bills for things you have had already consumed. Most ordinary purchases belong to this category. Another reason to avoid using credit cards is if you don't pay your bills in full each month. Paying only the minimum accumulates your debt and you are the type of person not advisable to make use of these instruments.
Getting rid of one's debt should be everyone's main goal in this time. By giving up your credit cards and living the life without access for credit while you are facing the problem, you will be disciplining yourself hardly with your financial mess. Until you reach the goal of being debt free, you will learn a valuable lesson you will always remember in your life. So pay it with cash for now and you will be rewarded soon. Get debt-free today with tips on how to get rid of debt here.
For more information on how to get rid of debt during the recession, go to http://www.Howtogetridofdebt.net/ by Paul J. Easton.
These folks need the help to untangle themselves from the destined future financial collapse. But some of them might be in denial of their financial situation as this can be very humiliating.
Distinguishing the existence of this situation, even on the personal level, is extremely important for one to wake up and restrain their spending habits before it is too late.
One of the fastest ways to get further into debt is to use your credit cards even if you have the cash to purchase something. This type of mindset where you buy something with nothing is a typical human tendency to seek for convenience. The down side however is that if one doesn't want to pay today with the purchase, he will not likely pay for it in the future. That is where the methods of restraining oneself in the aspect of personal finance are so important.
Always use cash whenever you make the everyday purchases like groceries and keep your credit cards away from the scene. If one can't resist the appeal of credit cards, it is very advisable that these must be avoided completely. If one is in a large balance that even the minimum payment is difficult to pay, it is suggested not to use the card anymore. Cut up the cards and use debit cards instead while you are still paying for the balances.
Why use cash? Because with credit cards, you are less likely to pay your credit card bills for things you have had already consumed. Most ordinary purchases belong to this category. Another reason to avoid using credit cards is if you don't pay your bills in full each month. Paying only the minimum accumulates your debt and you are the type of person not advisable to make use of these instruments.
Getting rid of one's debt should be everyone's main goal in this time. By giving up your credit cards and living the life without access for credit while you are facing the problem, you will be disciplining yourself hardly with your financial mess. Until you reach the goal of being debt free, you will learn a valuable lesson you will always remember in your life. So pay it with cash for now and you will be rewarded soon. Get debt-free today with tips on how to get rid of debt here.
For more information on how to get rid of debt during the recession, go to http://www.Howtogetridofdebt.net/ by Paul J. Easton.
About the Author:
Debt - Bonus Credit Reports coming soon!
posted by Credit Counseling at
5:01 PM
0 Comments
If all else fails in the economy at least we can turn the TV on and see how interest rate continue to decline in the Fed's effort to stimulate the economy.
Tons of senior borrowers call me daily asking about the lower interest rates. Some of them are currently in escrow and they want to know how the lower rate changes things for them.
I reply the rates have gone up, not down.
It is true interest rates are extremely low. The main index used for reverse mortgage adjustable rate products is now down to .45%. However, there are more things at work here.
On the other hand those that would invest in mortgage companies were not biting at the former profit margins offered.
You gotta have people investing or the whole deal goes caput. So, profit margins increased by one percent in the last week.
It's not a small increase, at least at one time. Margins have been creeping up at 1/4 point at a time.
How this will affect people is two fold. The first is equity will be stripped away more quickly once the indexes increase to normal levels.
The other affect is a lower loan size.
The very fact that higher interest rates for the reverse mortgage takes away equity quickly is the reason lenders lend less money.
A reverse mortgage lender must take the home's equity very seriously. It is the lender's security. Therefore the lender lends less when rates go up.
How mortgage companies go out of business, as we know from recent financial trouble, is when more is owed than the home is actually worth.
Lending laws don't allow lenders to come after the owners or owner's heirs for the difference. They are stuck with the home value as collateral.
Those who will receive the biggest surprise due to the new interest rate increase are those planning on closing on their reverse mortgage in the next month.
Some of them are planning to pay off mortgages in attempt to eliminate that high payment. Some of these folks won't be able to pay that mortgage off now.
We'll see how this plays out, but it's pretty tough right now.
Tons of senior borrowers call me daily asking about the lower interest rates. Some of them are currently in escrow and they want to know how the lower rate changes things for them.
I reply the rates have gone up, not down.
It is true interest rates are extremely low. The main index used for reverse mortgage adjustable rate products is now down to .45%. However, there are more things at work here.
On the other hand those that would invest in mortgage companies were not biting at the former profit margins offered.
You gotta have people investing or the whole deal goes caput. So, profit margins increased by one percent in the last week.
It's not a small increase, at least at one time. Margins have been creeping up at 1/4 point at a time.
How this will affect people is two fold. The first is equity will be stripped away more quickly once the indexes increase to normal levels.
The other affect is a lower loan size.
The very fact that higher interest rates for the reverse mortgage takes away equity quickly is the reason lenders lend less money.
A reverse mortgage lender must take the home's equity very seriously. It is the lender's security. Therefore the lender lends less when rates go up.
How mortgage companies go out of business, as we know from recent financial trouble, is when more is owed than the home is actually worth.
Lending laws don't allow lenders to come after the owners or owner's heirs for the difference. They are stuck with the home value as collateral.
Those who will receive the biggest surprise due to the new interest rate increase are those planning on closing on their reverse mortgage in the next month.
Some of them are planning to pay off mortgages in attempt to eliminate that high payment. Some of these folks won't be able to pay that mortgage off now.
We'll see how this plays out, but it's pretty tough right now.
posted by Credit Counseling at
7:21 AM
0 Comments
